Retailers’ holiday promotions and a shift in consumer buying habits generates heavy demand for Monday deliveries by FedEx.
With a new e-commerce site and a stronger focus on digital marketing, the distributor of metalworking tools and MRO products reported a 26.4% increase in e-commerce sales, which accounted for close to half of total sales. Its number of printed catalogs, meanwhile, is down by more than 12% over the past two years.
MSC Industrial Supply Inc., a distributor of metalworking tools and maintenance, repair and operations supplies, has been unusually busy over the past year or so. In addition to paying $550 million to acquire industrial products distributor Barnes Distribution North America a year ago this month, helping to bring its total SKU count to more than 1 million, it also launched a new e-commerce site designed to make its products easier to find on the web.
Those moves and others have helped to boost MSC’s total net sales, which rose 16.2% year over year for its fiscal second quarter ended March 1, 2014, to $661.5 million from $569.5 million, an increase of $92 million. That increase included a contribution of $69.8 million from the Barnes acquisition.
But e-commerce sales in the quarter increased at an even faster rate, rising about 26% to $309.59 million from $244.45 million a year earlier. More SKUs on the e-commerce site and more effective online marketing contributed to the e-commerce growth, the company says. The company added about 75,000 SKUs to its e-commerce site, MSCDirect.com, in the first half of the fiscal year, bringing the online total to about 760,000, and plans to add another 150,000 online later this year.
Steve Baruch, vice president of e-commerce, says MSC has been focusing more on digital marketing and less on print catalogs, its traditional method of selling. The company mailed about 10% fewer catalogs last year, 16.31 million mailed versus 18.03 million the prior year. At the same time, he adds, the relaunched web site—which is running a “highly customized” version of IBM Corp.’s WebSphere Commerce that MSC built in-house—has been designed to better connect customers with the products they’re looking for, Baruch says.
The redesigned e-commerce site makes it easier to change featured items and marketing campaigns, Baruch says. He gives as one example the ability to more easily build search marketing campaigns that bring web searchers to specific product pages rather than the home page or category pages. “How often do consumers search on Google and get dumped on a home page of the destination site, then have to search further?” he says. For MSC, he adds, “that’s unacceptable.”
With the improvements in web design and online marketing, and by expanding the number of products available on MSCDirect.com, MSC’s e-commerce sales reached 46.8% of total sales in the second quarter, up from 43.1% a year earlier, CEO Erik Gershwind said last week during a Q2 earnings call with stock analysts.
Going forward, the Melville, NY-based company says it expects its strengths in e-commerce—including its strategy of selling to customers through such purchasing portals companies as Perfect Commerce and SAP AG’s Ariba Network—will enable it to continue to build market share compared with smaller distributors.
MSC also reported for the second quarter ended March 1:
● E-commerce sales of $309.59 million were down by 0.8% from $312.11 million in the first quarter, as Q2 total net sales of $661.51 million fell 2.5% from Q1 total net sales of $678.51 million;
● Gross profit rose 19.7% year over year to $306.82 million from $256.37 million;
● Increases in operating expenses and other expenses, however, resulted in an 11.7% drop in net income, to $49.51 million from $56.08 million in the year-earlier period.
For the fiscal first half, MSC reported:
● Total net sales rose 16.5% year over year to $1.34 billion from $1.15 billion;
● Gross profit increased 19.2% to $621.7 million from $521.5 million;
● Net income declined by 9.0%, to $108.56 million from $119.27 million.
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